Lexington Insurance Company v. Precision Drilling Company, No. 18-8072 (10th Cir. 2020)
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In an earlier appeal, the Tenth Circuit Court of Appeals ruled that Wyoming’s anti-indemnity statute would not defeat possible insurance coverage to an additional insured. In this second appeal and cross-appeal, the issue presented for the Court's review centered on whether the district court correctly ruled that additional-insured coverage existed under the applicable insurance policies; whether the district court entered judgment for the additional insured in an amount greater than the policy limits; and whether the district court correctly ruled that the additional insured was not entitled to prejudgment interest and attorneys’ fees. Ultra Resources, Inc. held a lease for a Wyoming well site. In January 2007, Ultra contracted with Upstream International, LLC under a Master Service Agreement to manage the well site. The Ultra-Upstream contract required Upstream to obtain insurance policies with a stated minimum amount of coverage for Ultra and Ultra’s contractors and subcontractors. To do so, Upstream obtained two policies from Lexington Insurance Company - a General Liability Policy (“General Policy”) and a Commercial Umbrella Policy (“Umbrella Policy”). Lexington issued and delivered the two policies in Texas. Ultra contracted with Precision Drilling (“Precision”) to operate a drilling rig at the well site. Precision maintained a separate insurance policy with Lloyd’s of London (“Lloyd’s”), covering Precision for primary and excess liability. Upstream employed Darrell Jent as a contract management of some Ultra well sites. Jent assumed that Precision employees had already attached and tightened all A-leg bolts on a rig platform. In fact, Precision employees had loosened the A-leg bolts (which attach the A-legs to the derrick) and had not properly secured these bolts. After supervising the pin removal, Jent had just left the rig floor and reached “the top step leading down from the rig floor” when the derrick fell because of the “defectively bolted ‘A- legs’ attaching the derrick to the rig floor.” Jent was seriously injured after being thrown from the steps, and sued Precision for negligence. Precision demanded that Ultra defend and indemnify it as required by the Ultra-Precision drilling contract. Ultra, in turn, demanded that Upstream defend Precision under the insurance policies required by the Ultra-Upstream Contract.
The Tenth Circuit concluded the district court ruled correctly on each issue presented, so it affirmed.
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